This Coin Is a Dead Ringer for a $1,000 Investment in the Near Term

Few major cryptocurrencies have as favorable a setup as Solana's (SOL -3.45%). Between the chain's inexpensive gas fees, snappy transaction speeds, and collection of low-friction applications for investors, there's a lot to like about it already.

Solana (SOL) crypto might be a $1,000 investment in the near term, here's why

Solana (CRYPTO: SOL) is one of the few major cryptocurrencies that has a favorable setup. Between the chain's low gas fees, fast transaction speeds, and collection of low-friction applications for investors, there's a lot to like about it already. And as an investment, there's a lot more -- perhaps, very soon -- in store. Here's why this coin is a dead ringer for a $1,000 investment in the coming months.

Solana ETF approval could send the coin to the moon

Perhaps the largest catalyst that's inbound for Solana, potentially within the coming months, is the approval of exchange-traded funds (ETF) that hold the coin directly. Thus far, at least five asset managers, including VanEck, Canary Capital, Bitwise, and Grayscale, have filed applications with the Securities and Exchange Commission (SEC) to offer investors access to a Solana ETF. One of those asset managers, Grayscale, could have technically heard back from the SEC as early as Jan. 23. Therefore, it is distinctly possible that an ETF approval could be imminent, though even with cryptocurrency regulations expected to change significantly with the new Biden administration, it is not guaranteed.

But what would an ETF do for this chain? In short, it'd increase the chain's integration with flows of capital in the traditional financial markets. Today, investors interact with the Solana blockchain to buy the coin or tokens hosted on the chain via applications like Coinbase, Moonshot, and Phantom, each of which has a slightly different target audience. As easy to use as those tools are, there's still a bit of a barrier to onboarding investors who aren't willing to learn how to use new applications to invest in cryptocurrency.

Therefore, if the ETFs get approved, it'll give those investors an easier entry into the crypto ecosystem, as they'll be able to invest from their retirement accounts and brokerage services, without needing to learn anything about the underlying technologies.

The larger reason that the ETF approvals could be major for Solana is that it'll enable the giants of traditional finance to have access to deeply liquid investment vehicles that can give them their desired level of exposure to cryptocurrency. Hedge funds and other financial businesses may be able to construct derivative products using the ETF, thereby increasing the amount of trading volume, and likely creating demand for the asset mangers to buy more Solana in turn. And that'll drive the price up further.

This one is ripe for holding until the cows come home

The potential approval of the Solana ETFs is far from the only reason the coin is worth buying. In fact, while the details are scarce and the corresponding policy proposals are in flux at the moment, per ongoing discussions among regulators and lawmakers, Solana might also be included in the national cryptocurrency repository of the U.S., assuming one is ever made. Many investors are hopeful for such a repository to be filled by the government actively buying the coins selected for stockpiling.

While that might not actually happen -- it'd require disbursing public funds in ways that might prove politically difficult to justify -- the silver trophy for investors would be for the government to simply retain the coins it acquired via asset seizures related to law enforcement actions.

Governments find it beneficial to hold cryptocurrencies, such as Solana, for more than one reason. For starters, governments with a mandate to maintain a repository are major holders that are very unlikely to sell their coins, regardless of the ongoing price action. That helps to make a floor for a coin's price.

It's also an undeniable stamp of legitimacy for cryptocurrencies as an asset class, as well as a strong endorsement of the value of the particular coins held. Governments rarely turn on a dime, especially with regard to their investment policies, and that should give investors a big measure of confidence that the mere possibilities under discussion today are signs that Solana is a coin that'll be valuable years from now.

Therefore, it makes sense to invest at least $1,000 in Solana in advance of these catalysts potentially playing out, assuming you're willing to hold it for the next few years or more. While the chance of an ETF approval probably won't send the coin to the moon on its own, when paired with the strong possibility of the government's official onboarding via a repository, its long-term value is undeniable.